US Online Poker Ban - What it means for US Poker Players

Tuesday, October 10, 2006
by BroadbandPoker.com Staff

With the recent passing of the Unlawful Internet Gambling Enforcement Act of 2006 on Septemeber 30, 2006 by the U.S. Congress, poker players throughout the U.S. have been asking where can I still play online poker, is it going to be illegal and what is the future of online poker in the United States?

First and foremost... playing online poker in the U.S. is not illegal and never has been. The bill, that was only passed because it was attached to an important port security bill in a shady back room deal, but does not make playing online poker illegal. It simply makes it illegal for U.S. banks to accept online gambling transactions. Currently the only law that even comes close to making it illegal is the 1961 Wire Act which clearly only references it being illegal to make sports bets or wagers over the phone or through other communications which could include the internet, but it does not outlaw playing online poker.

For most who already play online poker this isn't a big inconvenience since most credit card companies and banks already stopped taking gambling transactions years ago. However, it could limit your ability to use online checks or ACH to make or withdraw funds from gambling or poker sites. Banks however have complained this would make them internet police and put too much of a strain on the banking industry considering there are millions and millions of electronic checks written yearly.

So, with most U.S. banking options out, players then ask how do I transfer funds to and from my favorite poker sites? Well, again most players that already play online tend to use off shore services like Neteller or Firepay. Both sites have released statements regarding the passing of this bill and how they feel it will affect them.

Neteller's Official Response:
US Member Update: 1st October 2006
On Friday 29 September 2006, the US Congress passed legislation which includes certain provisions to prohibit unlawful internet gambling through the restriction of payments to such sites.

The Bill states that there will be a period of up to 9 months for the US regulators to prescribe regulations requiring each designated payment system and all participants therein to identify and block or otherwise prevent or prohibit restricted transactions.

It is currently unclear how NETELLER, a European company, with no assets, presence or employees in the US, would be affected by this bill. Once the regulations have been written, NETELLER will have a clearer view of which companies are affected, how those companies will be expected to comply, and any possible resulting impact on NETELLER and its US facing business.

NETELLER continues to operate its business as normal.

Over 3 million customers in 160 countries trust NETELLER to transfer over $7 billion each year. NETELLER (UK) Limited is authorised and regulated in the United Kingdom by the Financial Services Authority and listed on the AIM market of the London Stock Exchange. To protect its customers’ money, all deposited, in-transit, and un-cleared funds are held in Trust Accounts.

Firepay's Official Response:
“On 30 September 2006, the United States Congress passed the Unlawful Internet Gambling Enforcement Act of 2006. The Act, upon becoming law, will prohibit gambling businesses from accepting any financial instrument in connection with unlawful Internet gambling. The Act will become law upon its approval by the President of the United States, which the Company expects will occur in the immediate near term.”  

“The Act does not define ‘unlawful Internet gambling’ nor does it make unlawful any activities by financial institutions that are not themselves gambling businesses. The Act directs the United States Federal Reserve and the Department of the Treasury to develop regulations that would direct financial institutions to identify and block certain types of financial transactions connected with unlawful Internet gambling.”

Firepay Update as of 3:40 am ET on Tuesday October 10, 2006
Payment processor FireOne Group (FirePay) said on Tuesday it would stop dealing with U.S. online gamblers after President George W. Bush signs a bill into law banning payments for online gaming there.

"The act will have a significant negative impact on the business ... and consequently the company has embarked upon a restructuring of its operations and cost base," it added.

The FirePay Board will continue to evaluate the situation and will provide customers with an updated statement as this situation progresses.

So, even though some changes in how payments are made to online poker sites will be affected but not all, one might then ask why sites like PartyPoker.com, PacificPoker.com and others have decided to pull out of the U.S. market, while other sites like FullTiltPoker.com and DoylesRoom have vowed to stay?

Well, it clearly has come down to publicy traded companies like Party and 888 pulling out because they have shareholders they have to answer to and their position is to defend the price of the stock at all cost. While privately owned sites like Full Tilt Poker and Doyles Room do not have public shareholders to take into consideration.

Here is an official statement from both Party Gaming and from Full Tilt Poker. You can clearly see the difference in their take on the current situation...

Official Statement from PartyGaming:
On 30 September 2006, the United States Congress passed The Safe Port Act.  That measure also contained certain provisions known as the ‘Unlawful Internet Gambling Enforcement Act of 2006’ that will affect the processing of payments between US customers and online gaming companies, including PartyGaming, that are publicly traded and licensed and regulated in respected jurisdictions.

The Act is expected to be signed into law by President Bush within the next two weeks.  If signed into law, it will immediately make unlawful the receipt by a gambling business of proceeds or monies in connection with unlawful internet gambling.  The Act does not clarify the definition of unlawful gambling. However, as the first piece of Federal legislation dealing explicitly with internet gaming, it does make clear that the US government intends to stop the flow of funds from Americans to online gaming operators through criminal sanction.  The Act also asserts that, under US law, a wager must be permitted under the laws both of the customer’s place of residence and that of the operator.

After taking extensive legal advice, the Board of PartyGaming Plc has concluded that the new legislation, if signed into law, will make it practically impossible to provide US residents with access to its real money poker and other real money gaming sites.  As a result of this development, the Board of PartyGaming has determined that if the President signs the Act into law, the Company will suspend all real money gaming business with US residents, and such suspension will continue indefinitely, subject to clarification of the interpretation and enforcement of US law and the impact on financial institutions of this and other related legislation.  Access to PartyGaming's online gaming sites for the Group's US free play customers will be unaffected.  Access for all of PartyGaming’s non-US customers will also be unaffected.

The Group’s strategic focus remains on developing its existing markets outside of the US and on developing new markets and products.  Should activities in the US be suspended, the Directors will also seek to re-align the Group's cost base to accommodate the changed business environment.  However, any such suspension would also result in the Group’s financial performance falling significantly short of consensus forecasts for 2006 and 2007. 

Mitch Garber, Chief Executive Officer of PartyGaming, said:

"This development is a significant setback for our company, our shareholders, our players and our industry.  While US horse race betting, state lotteries, fantasy contests and certain other online gaming activities have been exclusively protected under the new law, we are disappointed that the popularity and skill of poker in particular have not also been specifically protected.  The Board respects the laws of the US Government, and will continue to analyse their applicability, but also continues to believe that a regulatory framework for online gaming, including poker and casino gaming is the only sustainable long term solution.

"We have a substantial gaming business outside the US, one that is highly profitable and growing rapidly on one of the most technologically advanced platforms available.  In the first half of 2006 our non-US business generated revenues of $150 million, a 151% increase over the comparable period in the previous year.  Gaming on the internet is already a popular form of entertainment for millions of adults and we will continue to expand our business into new territories, offering fun, responsible and friendly competition in a safe and secure environment for customers around the world. PartyGaming is by far the largest online gaming company in terms of non-US business and liquidity and we intend to focus on and increase our advantage in that area."

A further update will be provided with the Q3 KPIs on 20 October 2006.

Here is the official statement from Full Tilt Poker:
As many people are well aware, the United States Congress recently passed legislation that aims to make it illegal for U.S. banks to process transactions related to online gaming.

We, like all online poker players, are dismayed and saddened by these potential regulations, and are doing our best to determine what these changes will mean to our customers. We are continuing to study this legislation and, until our investigation is complete, believe it would be wrong to comment on how these new rules will impact the ability for players to transfer funds to and from Full Tilt Poker.

In the short term, we assure you that your online experience at Full Tilt Poker will not change. You will still be able to deposit and withdraw money from the site using the same methods and payment processors you have always used, and your money will remain completely safe and secure. We cannot predict how the online poker experience may change in the future, but we do not expect any immediate impact from the legislation, as the banking industry has 270 days to implement new rules after the bill is signed.

It is also important to note that, once signed, the new legislation will not criminalize individuals for playing poker online. Instead, the bill will eventually attempt to prevent the transfer of funds to online gaming. As poker is a game of skill rather than pure chance, we hope that it will not be affected by this new bill. Speculation aside, however, we will continue to work closely with organizations like the Poker Player's Alliance to lobby for an exemption for online poker and for your right to play a truly American game from the privacy of your own home and computer.

While this last-minute congressional move has undoubtedly caused concern among our players, we want to assure you that Full Tilt Poker is legally regulated and licensed to offer its services to anyone around the world and that your day-to-day experience at the site will remain unchanged in all respects.

Full Tilt Poker

As you can clearly see each side takes a completely different take on the recent legislation that is expected to go into law later this week when President Bush formally signs it into law.

As a player, you should you be furious about the passing of this bill and the threat to your freedoms and privacy as an American, but you also have to realize that currently many sites are still opening their arms to take in U.S. players and with two of the largest online poker rooms dropping all U.S. players, sites like Full Tilt Poker and Doyles Room will explode with traffic.

One organization that has been fighting for your rights as Americans and as poker players is the Poker Players Alliance. They are an organization of more that 110,000 poker players, poker pros and industry professionals that are fighting for your right to play and enjoy the great American game of poker in your home or elsewhere. To learn more about them or to join, please visit them at the PokerPlayersAlliance.org.

So all in all not much has yet changed in the state of online poker. Yes there will be some changes to how you pay and some may be an inconvenience, but one thing is for sure... poker and online poker will never go away. For every site that pull out of the online market another one will pop up, but that is the real scary part of this bill.

Bill Frist, Senator from Tennessee said he helped head the bill to protect online players from losing all their money and being cheated by these unregulated online casinos. The problem with that is... all the major sites are already regulated and viewed as fair, legitimate businesses by almost all countries worldwide and even the World Trade Organization, but since the U.S. goverment isn't currently profiting off of them, they have ignored this and the WTO and instead decided how to stop online gaming even though this current bill provides exceptions for online lotteries and horse racing. Seems to us they could care less about players losing money and more about the almighty dollar.

Also, with the current administration being as unpredictable as the current marital status of Pamela Anderson, one can only hope the people of America stand up and protest this injustice of the American political system cause if you think they're simply going to stop here, you're sorely mistaken.

To get a list of most of the major sites that have released official statements, please visit the 2+2 poker forum.

Here is a list of the major online poker sites that are still taking U.S. based customers.
Full Tilt Poker
Doyles Room
Mansion Poker
Bodog Poker
PokerRoom
Poker Stars (undecided)

Join us in our poker forum to discuss this topic.

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